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Registered User
Joined: 11/14/2008
Posts: 17
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Since the forum seems light I will throw my hat in the ring.
Over the past few months I have been doing pretty well jumping from small caps to small caps (e.g. biotech, small oil/gas, regional banks, small shipping, etc.). This has served me pretty well and BANG! We are in a bull and all these small companies either ran out of steam or dropped through the floor during this bullish period.
So....... I think I may be done trying to bag whales and look for some more steady (and slow) gains. This board was full of smaller recommended companies (and really great advice) and I would like this to continue. Has the market changed? Do we need to start looking a little more at the fundementals (just a little) and not just the technicals? Trading more established companies for smaller more speculative ones?
What I am getting at as a fairly new trader (1 year) is it looks like the market is in a material shift from what it was just a few weeks ago. I caught quite a few waves before but it looks like surf is up and I am paddling in circles.
Any ideas from some of the more senior members (or anybody with a good idea) on how to play this next phase of the market?
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Registered User
Joined: 6/6/2005
Posts: 1,157
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I've been looking into this as lot as well, azure. I've caught a few good runs in low priced stocks in the last couple months but nothing like the ones I was finding on the first leg up. Seemed like every low priced stock I traded doubled. It was a great experience. But as you said, markets change.
Then it occured to me -- those low priced stocks that were doubling like mad on the first thrust and were below a dollar have now taken off.
As they climb higher they fall off the radar.
I did a test to see what happened in 2002/3 and the same thing happened. Tons of doubles in the beginning of the bull and then less and less in the low prices.
I think that the only thing that is going to bring back the plentiful small cap doubles is a major correction.
The good news is that higher priced stocks can also rocket. One way to find them is to look at all stocks that have doubled in the last 6 months. You will find the stocks with good relative strength there.
Then look for breakout patterns to new highs or good consolidation patterns. Be sure to be safe and keep position size and risk in check. Maybe we can post some here.
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Registered User
Joined: 2/19/2008
Posts: 193
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Thank you for posing the question. I'm also looking for some direction from the senior traders. I notice that there have been comments that there are Dragons to be found in all markets. But are they much more risky in this one?
Hope everyone had a wonderful holiday. My walk in the Maine woods today has my springer spaniel down- Four miles was a little too much for him!
It was a good break from the market. It is confounding me. Are dragons asleep or teasing? I went into ZHNE yesterday but I don't like todays candal. GlUU several days ago gave back gains immediately. Am I expecting too much too soon? PACR seems ready to sail tomorrow. But is this a strategy that may have worked well in June and are we in more of a position traders market now?
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Hey sailnadream,
Dragons (or penants) are continuation patterns and when the market has been traveling north for some time you will see more of them fail. As long as we continue higher without a correction, in my opinion, more and more traders are feeling less secure. I don't think that's unreasonable. This fire sale has been on for awhile now. But there are still good trades to be had. But you'll have to weed through, and probably even take your fair share of losers to get to them. Just be sure and position size correctly, meaning don't bent the farm on any single trade.
If we do get that new thrust to the upside we'll know it.
David John Hall
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Registered User
Joined: 1/28/2005
Posts: 6,049
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I believe that the best thing to put the odds in your favor
(assuming long) is to find stocks that are going up.
(unless you are using some specific bottom picking strategy)
When stocks are in an uptrend breakouts, pullbacks, trends
tend to work better.
Keep an eye on sector funds, sector etf's so that you know what's working.
An easy way to build watchlists is from ETF and Fund listings of their holdings.
If you think these will be boring, bluechip, Dow type stocks.
From the March lows:
MTL 520%
TX 380%
TCK 1014%
SOA 763%
VQ 409%
MEE 216%
These are all stocks from watchlists I built from fund/ETF holdings.
(there are simply too many good stocks to list)
Going forward Tech, materials,energy,commodities should all
be good sectors to choose from.
However don't take my word. Let the market tell you what's going on.
Thanks
diceman
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Registered User
Joined: 7/17/2009
Posts: 42
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Nice information here , thank you.
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Registered User
Joined: 2/19/2008
Posts: 193
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DavidJohnHall,
I changed my position sizes to reflect my risk tolerance and I'm feeling a lot more comfortable about my trades. Good advice, thank you.
Jean
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Registered User
Joined: 6/6/2005
Posts: 1,157
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You're welcome Jean,
Glad I could help.
Good luck!
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